Budget airlines scramble for Africa

Business News / 24 January 2013, 08:00am

Audrey D’Angelo.

Risk that Fastjet may not be allowed to take over 1time. Photo: Matthew Jordaan

A new “scramble for Africa” is taking place between airlines attracted by the increasing prosperity of a growing number of countries, together with a lack of infrastructure that makes surface travel difficult.

SAA, its low-cost division Mango and British Airways franchise holder Comair are among those who have realised the continent’s possibilities. So has London-listed budget airline Fastjet, which is building a pan-African carrier and lists Johannesburg as one of its intended destinations.

It is negotiating with the creditors of 1time, which had 15 percent of the South African domestic market when it went into provisional liquidation last month. It intends to re-start the airline as part of its rapidly growing network.

But Fastjet’s plans are being opposed by SAA, Mango and Comair, which see it as a threat to their share of the local and regional market.

They have submitted objections to Fastjet’s plan to become the controlling shareholder of the revived 1time with a 25 percent stake, on the grounds that legislation does not allow a foreign owner to have such a large share of a local airline.

The Air Services Licensing Act stipulates that South African residents must hold at least 75 percent of the voting rights in domestic airlines.

But the minister of transport has the power to grant exemption from this requirement and Fastjet has applied for this.

The provisional liquidator, Aviva Ndyamara, said there would have to be a public hearing before this could be done.

The Air Services Council is due to meet next month to hear arguments for and against the transfer of 1time’s airline licence to Fastjet.

This has to be done before February 27 when 1time is due to go into final liquidation.

Ndyamara said that if Fastjet’s application failed and it withdrew its offer to take over 1time, the creditors would receive very little.

Fastjet bought low-cost airline Fly540, based in Kenya, from Lonrho, which remains a shareholder, in June last year and operates a fleet of modern aircraft.

The airline has so far leased three Airbus A319 aircraft and plans to increase its fleet to 15 planes within the first year of operation.

It began flying in November, based on Fly540’s licences and routes, and says that in the first month of operations it carried almost 30 000 passengers.

Its first hub is in Dar-es-Salaam in Tanzania and it plans to open a second in Nairobi, from where Fly540 was launched, followed by others in Ghana and Angola.